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Fifth Community Pharmacy Agreement shuts shop on supermarket pharmacies

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Minister for Health Nicola Roxon recently announced that the Federal Government and the Pharmacy Guild of Australia (“the Guild”) had finalised negotiations as to the terms of the new Community Pharmacy Agreement (“the Agreement”).

This is the fifth version of the Agreement, with each one typically running for a five year period. The purpose of negotiating the Agreement is to come to a consensus regarding the regulation and funding of the Australian pharmacy industry.

The Agreement will take effect from 1 July 2010 and run for the next five years. Negotiations for this version of the Agreement were described as “extremely tough” by Guild President Kos Sclavos.

It will come as a great relief for the pharmacy industry that the Agreement maintains the existing prohibition against supermarkets operating pharmacies within their stores. This represents a major win for community pharmacies in the face of pressure on the government by the major supermarket chains to do away with this restriction.

Preservation of this prohibition came at a cost, with the Guild being forced to make several concessions in other areas. The most significant of which is a cut in Commonwealth funding of $1b over the five year term of the Agreement.

The main attributes of the Agreement are as follows:

  1. $15.1b in federal funding over the next five years
  2. Two year freeze on the dispensing fee (the fee paid to pharmacists for their professional advice and dispensing a drug)
  3. 40 cent per prescription PBS Online incentive payment to cease from July 2010
  4. Community pharmacy location rules will remain unchanged (1.5km between pharmacies with some exceptions)
  5. Continued prohibition on supermarkets from operating pharmacies within stores or having public access from within stores. (A supermarket is defined as a retail store or market, the primary business of which is the sale of a range of food, beverages, groceries and other domestic goods)

It is certain that the funding cut will result in the demise of several pharmacy industry programs. However, the preservation of the prohibition of pharmacies in supermarkets and maintenance of the location rules will have a positive impact on community pharmacies.

We anticipate that the Agreement will translate into higher market values for community pharmacies and increased investment by community pharmacy owners. Importantly, the Agreement gives certainty to many operators whose viability is now solidified for the coming five years.

If you are involved in the pharmacy industry and need advice on how the new Agreement will affect you, please contact one of our Pharmacy lawyers.

Authors: Fotini Kypraios & Nick Rimington